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Coverage
Question Your Liability Coverage
Liquor liability protection for your operation is not complex
once you understand what to ask when purchasing the coverage.
An
insurance policy is a contract between you and the insurance company.
If you do not ask the correct questions, it is possible that the
carrier will not address the strength of your liability coverage.
Address Your Needs
Take a common sense approach to your insurance needs. What are your
state statutes regarding dram shop claims? Your liquor department will
have the statutes and can explain to you when a business is liable.
There is some form of liability in every state when a bar or restaurant
serves a minor. Many state statutes only impose liability when the
drunk driver is a “known drunkard.” However, other states are much more
liberal regarding the responsibility of the establishment.
In addition, each state is unique regarding the existence of
liability, which is a dilemma for insurance underwriters. They must
risk-assess each state and charge a premium commensurate to the hazard
and the statutes and case law in that particular state. They also must
take into account the statistical drunk driving accidents and incidents
in your respective state.
Having consulted with underwriters in the past, it is certainly a
difficult task, and the research that follows risk assessments for the
insurance industry is truly astonishing. As an owner you must be aware
of how far the policy extends coverage. For example, does the policy
cover assault and battery cases?
This type of litigation is fast becoming the most frequent that
licensees must defend. Liquor statutes may impose additional
responsibility when these types of cases are filed.
Plaintiffs will file a complaint alleging that your establishment
has the responsibility of protecting its patrons. Does your policy
protect your business when the plaintiffs allege that you failed to
protect your patrons?
How would a diligent licensee verify that these issues are covered?
Relying on verbal promises is a bad idea. Time passes, memories fade
and disagreements arise when the insurance company denies liability
coverage under a specific provision, and the licensee disagrees because
of a verbal agreement he/she claims to have had with the carrier when
purchasing the policy.
As a result, the best method for documenting matters with your
insurance company is in writing, usually by e-mail. With busy
lifestyles and new technology, most professional people in the industry
now use e-mail for keeping in close contact with others.
If e-mails are used as your records,they should be printed and
filed with the policy. If coverage is later denied based upon a
provision of the policy, one can produce the e-mail as proof of how the
policy was represented and why you purchased the coverage in question
to clear up any ambiguity as to intent.
Are You Protected?
Always remember to ask questions about coverage in situations that
may arise in your business. For example, “I have a venue that has an
electric bull-riding machine for patrons within my premises. If
something happens to a person riding the bull, are we covered?” Another
example is, “My establishment provides adult entertainment. Am I
covered if something happens to a female dancer in my parking lot?”
These are legitimate questions and may not be covered if you do not disclose them.
If your establishment is in a college area, you most likely will be
concerned with over-serving, minors, and fake IDs. Does the carrier
address ID issues in the body of the policy? If not, make sure issues
are clarified in writing.
Research your state’s statutes and ask questions regarding
statutory liability. Does the policy cover your establishment if you
violate liquor law statutes? There are many other questions, but the
message is clear. Be well informed and use common sense in your
approach to purchasing an insurance policy. NCB
Randy Durnal is a court-qualified expert in the standard of care
nationwide. He consults on risk reduction and provides a professional
shopping service. Visit him online at www.dramshop.net or contact him
at (520) 298-5910.
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